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By Andy Bruce and William Schomberg
LONDON, Dec 20 (Reuters) - The Bank of England said on
Thursday that Brexit uncertainty had "intensified considerably"
over the last month and that falling oil prices were likely to
push inflation below its 2 percent target soon.
All nine of its rate-setters voted to keep rates at 0.75
percent, as expected. But minutes from their meeting this week
showed growing unease about turmoil surrounding Britain's
divorce from the European Union, now due in little more than
three months' time.
The British government said on Tuesday it would implement
plans for a no-deal Brexit in full and begin telling businesses
and citizens to prepare for the risk of leaving the EU without
an agreement.
BoE officials on Thursday lowered slightly their forecast
for British quarterly economic growth in the last three months
of 2018 to 0.2 percent from 0.3 percent previously, and said the
picture in the first quarter of 2019 was likely to be similar.
"Brexit uncertainties have intensified considerably since
the committee's last meeting," the Monetary Policy Committee
said in a summary of its December meeting.
"These uncertainties are weighing on UK financial markets."
They noted a recent fall in sterling and equity prices and a
rise in volatility.
While they stuck to their view that domestically-generated
price pressures continue to build, a drop in crude oil prices
was likely to push down the headline rate of consumer price
inflation to around 1.75 percent in January.
Inflation was likely to remain below target in the following
months.
Most economists polled by Reuters do not expect the BoE to
raise rates again until after Britain has left the EU in March,
and the BoE has said the terms of Brexit will heavily influence
the path for its monetary policy decisions.
The BoE repeated its view that interest rates could move in
either direction after Brexit, depending on how it turns out.
Late last month the BoE said Britain could suffer greater
damage to its economy than during the global financial crisis
under a worst-case Brexit scenario.
On Wednesday, the U.S. Federal Reserve raised interest rates
and stuck by a plan to keep withdrawing support from an economy
it views as strong -- further hitting U.S. stocks and bond
yields as investors feared the Fed risks choking growth.